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Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plan Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plan
Pension and Other Postretirement Benefits
Pension and Other Postretirement Benefit Plans
As of December 31, 2021, we had one qualified noncontributory defined benefit pension plan: the Union Plan. In June 2020, we completed the remaining settlement efforts for the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)), which had been terminated and substantially settled in late 2019. There are no plans to terminate the Union Plan.
Additionally, we sponsor non-qualified noncontributory defined benefit pension plans and postretirement benefit plans including multiple fully insured or self-funded medical plans and life insurance plans for certain retirees. The measurement date for all plans is December 31st for each respective plan year.
Pension Plan Termination & Settlement
During the second quarter of 2019, following receipt of a determination letter from the Internal Revenue Service (IRS), the Company amended the Merged Plan to (a) terminate the Merged Plan (subject to discretionary approval by the Company’s Chief Executive Officer) and (b) add a lump sum distribution option in connection with the termination of the Merged Plan, if approved. The Company subsequently provided participants of the Merged Plan an option to elect either a lump sum distribution or an annuity.
In October 2019, our Chief Executive Officer approved the termination of the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)). We provided participants of the Merged Plan an option to elect either a lump sum distribution or an annuity. A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution. The insurance company became responsible for administering and paying pension benefit payments effective January 1, 2020. In the third quarter of 2021, we recorded a $0.5 million pre-tax settlement charge in connection with further settlement efforts for the Merged Plan termination.
Upon completion of the pension termination and settlement processes for the Merged Plan, we had a $9.7 million remaining pension surplus investment balance. In July 2020 and December 2021, we transferred $9.2 million of the pension surplus investment balance to a suspense account held within a trust for the Rogers Employee Savings and Investment Plan (RESIP), a 401(k) plan for domestic employees. In December 2021, we transferred the remaining pension investment balance not initially transferred, to the RESIP trust suspense account. The investment balance not transferred to the trust suspense account will be used to pay any final plan expenses, after which the remainder of these funds will be moved to the RESIP trust suspense account. The funds in the RESIP trust suspense account have been, and will continue to be, used to fund certain employer contributions. As of December 31, 2021, the remaining pension surplus investment balance was approximately $6.6 million.
Plan Assets and Plan Benefit Obligations
The following table summarizes the change in plan assets and changes in benefit obligations:
Pension BenefitsOther Postretirement Benefits
(Dollars in thousands)2021202020212020
Change in plan assets:
Fair value of plan assets as of January 1$35,296 $42,835 $— $— 
Actual return on plan assets(222)3,615 — — 
Employer contributions— — 165 192 
Benefit payments(1,612)(1,647)(165)(192)
Transfer related to plan termination— (9,744)— — 
Pension settlements— 237 — — 
Fair value of plan assets as of December 31$33,462 $35,296 $— $— 
Change in plan benefit obligations:
Fair value of plan benefit obligations as of January 1$30,289 $30,300 $1,503 $1,599 
Service cost— — 41 56 
Interest cost732 908 26 40 
Actuarial (gain) loss(757)491 39 — 
Benefit payments(1,612)(1,647)(165)(192)
Pension settlements— 237 — — 
Fair value of plan benefit obligations as of December 31$28,652 $30,289 $1,444 $1,503 
Amount overfunded (underfunded)$4,810 $5,007 $(1,444)$(1,503)
The decreases in our plan benefit obligations in 2021 and 2020 were primarily driven by benefit payments, partially offset by interest costs and actuarial losses.
Our pension-related balances reflected in the consolidated statements of financial position consisted of the following:
Pension BenefitsOther Postretirement Benefits
As of December 31,As of December 31,
(Dollars in thousands)2021202020212020
Assets & Liabilities:
Non-current assets$5,123 $5,278 $— $— 
Current liabilities(3)(14)(136)(148)
Non-current liabilities(310)(257)(1,308)(1,355)
Net assets (liabilities)$4,810 $5,007 $(1,444)$(1,503)
Accumulated Other Comprehensive Loss:
Net actuarial (loss) gain$(11,807)$(11,171)$80 $119 
Prior service benefit— — — 97 
Accumulated other comprehensive (loss) income$(11,807)$(11,171)$80 $216 
The projected benefit obligation (PBO), accumulated benefit obligation (ABO), and fair value of plan assets for the pension plan with a PBO or ABO in excess of its plan assets were immaterial as of December 31, 2021 and 2020.
The PBO, ABO, and fair value of plan assets for the pension plan with plan assets in excess of its PBO or ABO were $28.3 million, $28.3 million and $33.5 million, respectively, as of December 31, 2021. The PBO, ABO, and fair value of plan assets for the pension plans with plan assets in excess of their PBO or ABO were $30.0 million, $30.0 million and $35.3 million, respectively, as of December 31, 2020.
The PBO and ABO of plan assets for the other postretirement benefit plans with a PBO or ABO in excess of plan assets were both $1.4 million as of December 31, 2021. The PBO and ABO of plan assets for the other postretirement benefit plans with a PBO or ABO in excess of plan assets were both $1.5 million as of December 31, 2020. The other postretirement benefit plans did not have any plan assets as of December 31, 2021 or 2020.
Components of Net Periodic Benefit Cost (Credit)
The components of net periodic benefit cost (credit) were as follows:
Pension BenefitsOther Postretirement Benefits
Years Ended December 31,Years Ended December 31,
(Dollars in thousands)202120202019202120202019
Service cost$— $— $— $41 $56 $61 
Interest cost732 908 5,641 26 40 59 
Expected return of plan assets(1,558)(1,574)(6,932)— — — 
Amortization of prior service credit— — — (97)(112)(1,011)
Amortization of net loss (gain)387 427 1,514 — — — 
Settlement charge— (63)53,213 — — — 
Net periodic benefit cost (credit)$(439)$(302)$53,436 $(30)$(16)$(891)
Plan Assumptions
The key plan assumptions utilized in our annual plan measurements were as follows:
Pension BenefitsOther Postretirement Benefits
2021202020212020
Weighted average assumptions used in benefit obligations:
Discount rate2.75 %2.50 %2.25 %1.75 %
Weighted average assumptions used in net periodic benefit costs:
Discount rate2.50 %3.25 %1.75 %2.75 %
Expected long-term rate of return on assets4.53 %4.53 %— %— %
For measurement purposes as of December 31, 2021, we assumed an annual health care cost trend rate of 6.25% for covered health care benefits for retirees pre-age 65 or post-age 65. The rate was assumed to decrease gradually by 0.25% annually until reaching 4.50% and remain at that level thereafter. For measurement purposes as of December 31, 2020, we assumed an annual health care cost trend rate of 6.50% for covered health care benefits for retirees pre-age 65 or post-age 65.
Our pension plan assets are invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. In managing these assets and our investment strategy, we consider future cash contributions to the plan as well as the potential of the portfolio underperforming the market. We set asset allocation target ranges based on current funding status and future projections in order to mitigate the portfolio performance risk while maintaining its funded status. Fixed income securities comprise a substantial percentage of our plan assets portfolio. As of December 31, 2021, we held approximately 90% fixed income and short-term cash securities and 10% equity securities in our portfolio, compared to December 31, 2020 when we held approximately 90% fixed income and short-term cash securities and 10% equity securities.
In determining our investment strategy and calculating the net benefit cost, we utilized an expected long-term rate of return on plan assets, which was developed based on several factors, including the plans’ asset allocation targets, the historical and projected performance on those asset classes, as well as the plan’s current asset composition. To justify our assumptions, we analyzed certain data points related to portfolio performance. Based on the historical returns and the projected future returns, we determined that a target return of 4.53% is appropriate for the current portfolio.
The following table presents the fair value of the pension plan net assets by asset category and level, within the fair value hierarchy, as of December 31, 2021 and 2020:
Fair Value of Plan Assets as of December 31, 2021
(Dollars in thousands)Level 1Level 2Level 3Total
Fixed income bonds$— $28,392 $— $28,392 
Mutual funds3,400 — — 3,400 
Pooled separate accounts— 380 — 380 
Guaranteed deposit account— — 1,290 1,290 
Total plan assets at fair value$3,400 $28,772 $1,290 $33,462 
Fair Value of Plan Assets as of December 31, 2020
(Dollars in thousands)Level 1Level 2Level 3Total
Fixed income bonds$— $29,896 $— $29,896 
Mutual funds3,535 — — 3,535 
Pooled separate accounts— 518 — 518 
Guaranteed deposit account— — 1,347 1,347 
Total plan assets at fair value$3,535 $30,414 $1,347 $35,296 
The following table presents a summary of changes in the fair value of the guaranteed deposit account’s Level 3 assets for the year ended December 31, 2021:
Guaranteed Deposit Account
Balance as of December 31, 2020$1,347 
Change in unrealized gain (loss)(24)
Purchases, sales, issuances and settlements (net)(33)
Balance as of December 31, 2021$1,290 
Cash Flows
We were not required to make any contributions to our qualified noncontributory defined benefit pension plan in 2021 and 2020. We made expected benefit payments for our qualified defined benefit pension plan through the utilization of plan assets for the funded pension plans in 2021 and 2020. As there is no funding requirement for the non-qualified noncontributory defined benefit pension plans and other postretirement benefit plans, we funded benefit payments, which were immaterial in 2021 and 2020, as incurred using cash from operations.
The benefit payments are based on the same assumptions used to measure our benefit obligations as of December 31, 2021. The following table sets forth the expected benefit payments to be paid for the pension plans and the other postretirement benefit plans:
Pension BenefitsOther Postretirement Benefits
2022$1,774 $136 
2023$1,778 $153 
2024$1,779 $145 
2025$1,822 $157 
2026$1,761 $172 
2027-2031$8,401 $677 
Employee Savings and Investment Plan
We sponsor the RESIP, a 401(k) plan for domestic employees. Employees can defer an amount they choose, up to the annual IRS limit of $19,500. Certain eligible participants are also allowed to contribute the maximum catch-up contribution per IRS regulations. We match each eligible employee’s annual pre-tax contributions at a rate of 100% for the first 1% of the employee’s salary and 50% for the next 5% of each employee’s salary for a total match of 3.5%. Unless otherwise indicated by
the participant, the matching dollars are invested in the same funds as the participant’s contributions. RESIP related expense amounted to $5.6 million, $4.9 million and $4.4 million in 2021, 2020 and 2019, respectively.